Why can’t we just pay Mom’s senior caregiver/housekeeper a salary?

Senior caregivers are hourly employees under the law.

Housekeepers and and senior caregivers who are not “companions” are classified under the Fair Labor Standards Act (FLSA) as hourly workers entitled to minimum wage and overtime (non-exempt). The term non-exempt employee refers to a worker who IS subject to the terms of the FLSA regarding such issues as overtime compensation and minimum wage coverage, contemporaneous time tracking record keeping, as well as regulations governing how frequently the worker must be paid. FLSA requirements are determined not by the type of pay (hourly or salary) but by the type of work that is performed. You must pay your senior caregiver hourly.

In simple terms, the household employee is required to be paid an hourly wage and is entitled to overtime pay per the provisions of the FLSA. When your household employee receives a “salary” that covers a work week of more than 40 hours, your employment agreement must explicitly state the regular and overtime rates of pay. The team at HWS can help you translate your desired weekly salary into an hourly and overtime rate that protects you and the nanny. See our exclusive Hourly Rate Calculator for help.

It is important to note that the FLSA specifically calls out household employees in the statue as non-exempt employees, covered by the rules and protections of the FLSA. This is not a grey area, subject to individual interpretation.

Exempt employees are paid a salary and exempted from these FLSA rules. Typically, only executive, supervisory, professional or outside sales positions are classified as exempt employment. Many household employers are professional workers, are exempt from FLSA protections, and unintentionally try to craft compensation for their nanny in the same manner that they are compensated.

Hourly wage payment requirements are not determined by the type of pay (hourly or salary) but rather by the nature of the work performed. Employers often believe, incorrectly, that the act of paying a salary makes the employee exempt from hourly pay and overtime rules. However, just as applying the labels “employee” or “independent contractor” in a work agreement doesn’t determine a worker’s actual status in the eyes of the IRS or the law, the same is true for exempt and non-exempt employees in the eyes of the Department of Labor. The FLSA legislation was designed to cover, and protect, as many workers as possible and there is no doubt that housekeepers are covered under the act.

The Department of Labor is vigorous about protecting workers’ rights under the FLSA. New York household workers have a toll free hotline they can consult when they feel they have a grievance over unpaid hours or overtime. These workers are assisted in filing wage and hour complaints. 75% of these complaints settle for cash payments that in 2012 ranged from $5000 – $100,000 – payments the household employer must make to the employee. Wage and hour complaints are also a powerful payroll tax enforcement tool used by state governments to collect unpaid unemployment taxes. Twelve states, including California, New Jersey, New York and Virginia have formal information sharing agreements with the Internal Revenue Service to facilitate collection by the federal government of unpaid Social Security and Medicare taxes.

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About Us

HomeWork Solutions specializes in providing household employers and their tax preparers real solutions for nanny tax compliance. We are nationally recognized experts in the field of household employment taxes, regularly consulted by media such as the New York Times and Wall Street Journal.